We can help you design and deliver an exceptional demand forecasting process.
Demand forecasting is a critical business requirement to support a range of business functions, including logistics, production and finance. It is only with an agreed and considered forecast that functions can adequately plan capacity, inventory, labour and cash-flow.
When forecasting demand, it is key that all elements that can impact sales are identified, assessed and incorporated. Consequently, demand forecasting is not only a statistical exercise, but also requires cross-functional input from teams including sales, supply chain, finance and production.
Many businesses fail to have a cross-functional forecasting process, and often rely only on statistics. This can lead to a lack of business confidence in the forecast and it is not uncommon to find different departments developing their own isolated forecasts; sales, supply chain, production and finance will often see the future very differently!
How our supply chain consultants can help you take demand forecasting to the next level
A good demand forecast can only be the result of a good demand forecasting process. That process needs to be fast and dynamic for all participating functions, and it needs to have cross-functional consensus.
The first step needs to be a statistical ‘baseline’ expectation which is then passed through each department for sense-checking and input. Varying additions or constraints may need to be applied, including marketing promotions, production capacities, logistics capacities, supplier issues and inventory constraints.
Depending on client requirements we can take several approaches to developing a demand forecast.
Example of a development approach to demand forecasting:
Step 1: Hypothesis Definition
Defining the hypothesis for future sales demand is an important first step. The hypothesis is likely to be formed from a strategic intention alongside suppositions on the economic environment, market opportunity and competitor performance.
With the hypothesis defined, further consideration can then be given to what data will need to be collected to prove/disprove the supposition. This may take the form of tracking sales calls made, volume demanded by targets, sales executives’ perceived probability of success, conversion rates into actual sales, forecasting of future demand from new clients, or tracking how that forecast compares to quantity actually demanded.
Latest Demand Forecasting Insights
We have an extensive library of articles relating to all things supply chain. The articles aim to explain and clarify all aspects of supply chain management, including demand forecasting and demand planning. If you want more information on this topic and how we can help, read through the selected articles below.
Speak with a supply chain consultant today
Contact our supply chain consultants to discuss any aspect of demand forecasting and demand planning. From statistical modelling to S&OP process development and implementation, we’re here to provide the support you need.
Call 0121 517 0008 or use the contact form.